Market and influencing factors
According to the KION Group’s estimates, the material handling market – comprising industrial trucks and supply chain solutions and related services – has expanded at a faster rate than global economic growth over the past five years. The value of the market has increased at an average annual rate of around 6 per cent in that time.
Of the relevant market volume, almost 60 per cent is estimated to be attributable to industrial trucks and related services, which are essential elements in the production and logistics processes of many manufacturers as well as in the wholesale and retail sectors. The remaining market volume is accounted for by supply chain solutions, the growth of which is fuelled in no small part by the increasing automation and digitalisation of production and logistics processes in various industries. The main overarching growth drivers are the advancing interconnectivity of the global economy and the demand for decentralised warehouse and logistics capacity in response to value chains and supply chains that are becoming increasingly fragmented. The strong growth of e-commerce and the increasing prevalence of omnichannel approaches in all kinds of industries is boosting capital expenditure on the reconfiguration of supply chains.
Economic conditions in the different regions and the rates of growth in global trade have a major influence on customers’ willingness to invest. Historically, new business in the Industrial Trucks & Services segment has shown a very strong correlation with the performance of broad economic indicators, such as industrial output. By contrast, the Supply Chain Solutions segment tends to be less cyclical owing to longer project cycles, often lasting for several years, and to the stable growth of e-commerce. In both segments, the service business is generally more stable than the product or project business as it is linked to the installed base of trucks and systems over their entire lifetime. The economic situation is also affected by competition levels, exchange rates and changes in commodity prices.
Economic trends within individual customer sectors are another important factor. The most significant of these sectors are manufacturing, the food industry, general merchandise and grocery wholesale and retail, logistics services and pure e-commerce, which has the highest growth rates.
Regulatory frameworks have a major impact on the business model, both in the Industrial Trucks & Services segment and in the Supply Chain Solutions segment. The products and services of companies in the KION Group have to comply with the specific legal requirements in their respective markets. Compliance with the different requirements has to be verified or certified. Many of the legal requirements are enshrined in product-specific standards and other norms (e.g. EN, ISO and DIN).
Legal requirements also apply to the construction and operation of production facilities, including in relation to air pollution avoidance, noise reduction, waste production & disposal and health & safety. The KION Group fulfils all of these requirements as well as all the legal provisions pertaining to exports and financing business.
Influencing factors in the Industrial Trucks & Services segment
Despite a decline in orders in 2019, the value of the global market for industrial trucks has, according to the KION Group’s estimates, increased by an average of 4 per cent annually over the past five years. This is due in equal measure to the growth in the volume of new truck business and the rise in the contribution from the service business compared to the past. Measured in terms of units ordered, 36 per cent of the global market was attributable to IC counterbalance trucks in 2019, while electric forklift trucks accounted for 16 per cent and warehouse technology 48 per cent. It should be noted that the per-unit price for warehouse technology is considerably lower than for counterbalance trucks, which is why the breakdown by value shows that counterbalance trucks clearly dominate. IC counterbalance trucks continue to make up a comparatively high proportion of the total unit volume in growth regions. The strongest growth in the new truck business in recent years has been for forklift trucks and warehouse trucks powered by an electric motor. Much of the additional volume is attributable to the electrification of manual hand pallet trucks, which are being replaced by entry-level trucks in the lower weight categories. Better drive technologies, in particular lithium-ion drives, are also contributing to the growth in electric trucks and equipment. Moreover, driverless transport solutions developed by automating standard warehouse trucks are becoming more and more appealing to customers.
All price segments continue to benefit from customers’ growing requirements regarding the quality, efficiency and eco-friendliness of industrial trucks and from higher expectations in terms of service, availability of spare parts and flexible rental solutions. In this segment, customers are much more focused than before on optimising total cost of ownership and, increasingly, on the ability to integrate the trucks into fully automated intralogistics solutions. At the same time, there is mounting competitive pressure worldwide as some manufacturers in the economy segment based in emerging markets are pursuing an international expansion strategy. In mature markets and, increasingly, in growth regions, the large number of trucks in use also provides a strong base for replacement business and rising demand for services.
Influencing factors in the Supply Chain Solutions segment
According to the KION Group’s estimates, the market for supply chain solutions has expanded much faster than the market for industrial trucks and services over the past five years owing to growing demand in the main customer industries. Both the project business (business solutions) and downstream services (customer services) have contributed to this expansion. The service business benefits from the growing number of installed systems and the trend towards the outsourcing of logistics processes.
The growth of e-commerce has a major influence on demand for supply chain solutions, including warehouse automation and solutions for sorting and for automated goods transport. According to market analysis by the Ecommerce Foundation, global online trade (B2C) expanded at an average rate of around 14 per cent between 2014 and 2019. Increasing complexity, cost pressures and shifting customer expectations require shorter lead times, a more efficient flow of goods, a wider product range and process reliability. This is pushing up demand for decentralised warehouse and logistics capacity that enables faster deliveries and, due to automated processes, keeps down personnel expenses and floor space costs. The digitalisation and automation of industrial production and supply chains and the omnichannel strategies being adopted in traditional industries – for example supermarket chains, grocery wholesale and retail, fashion, food and beverage manufacturing, and parcel and courier services – are also contributing to this. At the same time, the focus of technological progress is increasingly shifting towards software and robotics solutions. According to the market research company Interact Analysis, there will be strong growth in the market for robotic sorting systems as key components of automated distribution centres, in automated guided vehicles (AGVs) and in autonomous mobile robots (AMRs), and these solutions will become increasingly prevalent as a result.